Mega Funds: Size Matters (detailed Chart Book)

 

There is one consistency in the sea of change that is the investment management industry: the big continue to get bigger.

Globally, there are now 774 mutual funds with greater than USD five billion in AuM – up from 650 at the end of 2007.

While these ‘mega’ funds account for only 0.9% of the total number of mutual funds available for sale worldwide (of a total ~83,500 funds), they control 51.1% of the total global AuM (USD 11.5 of 22.6 trillion).

Given their size and buying power, mega funds have huge implications for all industry participants.  I am pleased to share some of our recent research on the subject.

Chart Book: Mega Funds contains 25 charts illustrating the growth dynamics of the mega fund universe over the last several years.

We welcome your thoughts and questions.

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Background:  Mega Funds in the post-2008 Period

The period since 2008 has been exceptional in the mega fund universe.  There are funds that have effectively gone from zero to greater than USD 25 billion in five years.  There are now fallen behemoths that had reached industry record high water marks only then to lose half or more of AuM.

Further, the 2008-2015 period is exceptionally interesting to study because of the strong market tailwinds that have been driven a significant portion of growth. Distinguishing between organic growth (flows) and market movement is a central element to understanding the quality and predictability of mega funds trajectories.

The study of mega funds and the dynamics governing their rise and fall have been core to Propinquity’s body of analysis for the last several years. We have considered mega funds and their impact on everything from systemic risk through the prices of publicly listed managers stock prices who offer them. We have evaluated how to compete with them and against them.  We consider the distribution dynamics that facilitate their often rapid growth and sudden declines.

View below or download here.

Mega Funds_Propinquity Advisors August 2015